WELDING ELECTRODES

A. INTRODUCTION
Welding Electrodes are widely used consumables in all industries where welding jobs
are done. The welding electrodes are used in industries where exclusive job works on
welding is done and also in other industries where production operations are conducted.
The consumption of these welding electrodes is increasing in line with the increase in
the industrial production in all the sectors. There is a good scope for this fast
consumable item to be produced in small scale sector.

B. PRODUCT USES AND SPECIFICATIONS

The welding electrodes are manufactured in various sizes namely 2.5 x 350 mm,3.15 x
350 mm ,4.00 x 450 mm and 5.00 x 500.

C. MARKET POTENTIAL

The welding electrodes are used for welding operations in the following industries
1. General engineering workshop
2. Cement plant and machinery manufacturing
3. Sugar plant and machinery manufacturing
4. Ship building industries
5. Chemical and allied industries.
6. Plant and machinery manufacturing industries

D. TECHNICAL ASPECTS

1. Installed Capacity
The proposed installed capacity of the unit is manufacturing 3000 kgs of Welding
Electrodes per day on a single shift basis, 8 hours per day, 300 days in a year. The
product mix proposed is as follows:

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2.5 mm-450 packets of 60 pcs per packet per day-135 000 packets per annum
3.15 mm-370 packets of 90 pcs per packet per day-110 000 packets per annum
4.0 mm-350 packets of 60 pcs per packet per day- 105 000 packets per annum
5.0 mm-85 packets of 60 pcs per packet per day-25 500 packets per annum

2. Plant and Machinery

The following machineries are required for production.
Machine name Quantity Value
(Nos.) (Rs.lakhs)
Wire straightening and cutting machine with 1 3.66
tungsten carbide toolings for one size of wire
Slug press 1 2.10
Extrusion plant consisting of ,wire feeder, 1 17.97
Hydraulic extrusion press, conveyor, electrode
printing unit
Electrode wire and flux reclamation machine 1 1.99
Dry mixer 1 2.59
Wet Mixer 1 4.23
Extra sets of toolings for wire straightening 1 0.31
machine and cutting machine
Electrode Drying oven 1 3.06
Electrode concentricity tester 1 0.09
Total 36.00

3. Manufacturing Process
The manufacturing involves the following sequence of operations

Wire cutting
I
Binders-Dry flux preparation
I
Wet flux preparation Briquetting
I
Loading wire in Hopper
I
Extrusion of Electrodes
I
Printing
I
Concentricity testing and visual Inspection
I
Baking

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 I
Visual inspection
I
Packing
I
Packing and Despatching

4. Raw Material
The raw materials required for manufacturing Weighing machines are M.S. wire of
various thicknesses namely 2.5 mm, 3.15 mm, 4.00 mm and 5.00 mm. For preparing
the flux various materials such as Rutile Titanium dioxide, Ferro manganese, cellulose,
Potassium /sodium silicate, Quartz, China clay, Magnasite Illuminate etc are required.
These are available from dealers.

5. Land & Building

A rented place with 2000 sqft. area is required. The monthly rent is estimated at
Rs10000 and the advance anticipated is Rs.100000

6. Utilities

Power:
The total power requirement of the unit will be 90 HP

Water:
Water is required only for human consumption.
Man power:
Category Nos. Monthly Total
salary Salary
Supervisors 1 5000 5000
Operators 5 3000 15000
Unskilled 5 2000 10000
Assistants 2 3000 6000
Security 2 2000 4000
Total 40000
Add 20%benefits 8000
Total 48000
Annually Rs.5.76 lakhs

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7. Implementation Schedule

If financing arrangements is made available the project can be implemented within three
months period.

8. ASSUMPTION

Installed Capacity per annum Welding electrodes :

2.50 mm 135000 packets p.a.
3.15 mm 110000 packets p.a.
4.00 mm 105000 packets p.a.
5.00 mm 25500 packets p.a.
Capacity utilization-Year -1 60%
Year-2 70%
Year-3 80%
Selling price per unit Welding Electrodes:
2.50 mm Rs.70 per packets
3.15 mm Rs.95 per packets
4.00 mm Rs.120 per packets
5.00 mm Rs.180 per packets

Requirement Rate/ k.g. Value

Material cost at 100% p.a. (K.g.) (Rs.) Rs.lakhs
M.S.Wire Electrode
for 2.50 mm 109500 26.0 28.47
for 3.15 mm 213000 25.7 54.74
for 4.00 mm 288000 25.7 74.02
for 5.00 mm 109500 25.7 28.14
Total 185.37

Flux 225000 33.0 74.25

Total 259.62
Add : Wastage 15% 38.94
Total 298.56

Consumables per annum-at 100% (Rs.lakhs) Rs.2.40 lakhs

Power and Fuel p.a. -100% (Rs.lakhs) Rs.7.25 lakhs
Wages & salaries p.a.-100% (Rs.lakhs) Rs.5.76 lakhs
Repairs & Maintenance- p.m. Rs.5000/-
Depreciation Written down Value Method
General & administration Expenses per month Rs.50000/-
Selling expenses 3% on Sales
Interest on term loan and Working capital finance 14% p.a.
Income tax provision 36% on profit

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LIST OF MACHINERY SUPPLIERS

1. Sharp Tools
No.9/10, SITRA Road
Sharp Nagar
Kalapatti
Coimbatore-641 035

2. Vanarc Welding Electrodes

No.28/23, Rani anna Nagar
Chennai 600 078

3. Bharat Engineering and Machine Works

No.1021, Sathy Road
L.K.Puram
. Coimbatore-641 006

LIST OF RAW MATERIAL SUPPLIERS

1. Swil Ltd
No.8, Kondi Chetty street
Chennai-600 001

2. Stanard Wire Products

Old No.219, SIDCO Industrial Estate
Ambattur
Chennai-600 058

3. Wire & Wire Products

New No.25, Vepery Road
Peramet
Chennai- 600 003t

4. Deccan Wires & welding products pvt Ltd

No.18 Shanthapa Lane
S.P.Cross Road
Bangalore-560 002

5. P.K.Vaduvammal
97, Rasappa Chetty Street
Chennai-600 003

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1. COST OF PROJECT
[Rs.lakhs]

Land & Building (Advance) 0.50

Plant & Machinery 36.00
Other Misc. assets 0.50
Pre-Operative expenses 2.00
Margin for WC 5.31
44.31

2. MEANS OF FINANCE

Capital 17.31
Term Loan 27.00
44.31

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3. COST OF PRODUCTION & PROFITABILITY STATEMENTS
[Rs.lakhs]
Years 1 2 3
Installed Capacity (No of packets)
Welding electrodes-2.50 mm 135000 135000 135000
Welding electrodes-3.15 mm 111000 111000 111000
Welding electrodes-4.00 mm 105000 105000 105000
Welding electrodes-5.00 mm 25500 25500 25500
Utilisation 60% 70% 80%
Production/Sales (No.)
Welding electrodes-2.50 mm 81000 94500 108000
Welding electrodes-3.15 mm 66600 77700 88800
Welding electrodes-4.00 mm 63000 73500 84000
Welding electrodes-5.00 mm 15300 17850 20400

Selling Price/packet(in Rupee)

Welding electrodes-2.50 mm Rs.70
Welding electrodes-3.15 mm Rs.95
Welding electrodes-4.00 mm Rs.120
Welding electrodes-5.00 mm Rs.180

Sales Value (Rs.lakhs)

Welding electrodes-2.50 mm 56.70 66.15 75.60
Welding electrodes-3.15 mm 63.27 73.82 84.36
Welding electrodes-4.00 mm 75.60 88.20 100.80
Welding electrodes-5.00 mm 27.54 32.13 36.72
Total sales value 223.11 260.30 297.48

Raw Materials 179.14 208.99 238.85

Consumables 1.44 1.68 1.92
Power 4.35 5.08 5.80
Wages & Salaries 5.76 6.05 6.35
Repairs & Maintenance 0.60 0.63 0.66
Depreciation 9.63 7.22 4.79
Cost of Production 200.92 229.65 258.37

Admin, & General expenses 6.00 6.30 6.62

Selling expenses 6.69 7.81 8.92
Interest on Term Loan 3.78 3.31 2.36
Interest on Working Capital 2.80 2.80 2.80
Total 220.19 249.87 279.07

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Profit Before Tax 2.92 10.43 18.41
Provision for tax 1.04 3.72 6.57
Profit After Tax 1.88 6.70 11.84

Add: Depreciation 9.63 7.22 4.79

Cash Accruals 11.51 13.93 16.63

4. WORKING CAPITAL:
[Rs.lakhs]
Months Values % Margin Bank
Consumption Amount Finance

Raw Materials 0.75 11.20 25% 2.80 8.40

Consumables 1.00 0.12 25% 0.03 0.09
Finished goods 0.25 4.19 25% 1.05 3.14
Debtors 0.50 9.30 10% 0.93 8.37
Expenses 1.00 0.50 100% 0.50 0.00
25.31 5.31 20.00

5. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax 11.84

4%
Sales 297.48

Profit before Interest and Tax 23.57

37%
Total Investment 64.31

Profit after Tax 11.84

68%
Promoters' Capital 17.31

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6. BREAK EVEN LEVEL

Fixed Cost (FC):

[Rs.lakhs]
Wages & Salaries 6.35
Repairs & Maintenance 0.66
Depreciation 4.79
Admin. & General expenses 6.62
Interest on TL 2.36
20.78

Profit Before Tax (P) 18.41

FC x 100 20.78 80
BEL = x x 100
FC +P 39.19 100

42% of installed capacity